On November 2, 2023, the Consumer Financial Protection Bureau issued a report on the community reinvestment laws of seven states (Connecticut, Illinois, Massachusetts, New York, Rhode Island, Washington, West Virginia), and the District of Columbia that evaluate the record of state-chartered financial institutions and other lenders in meeting the credit needs in their communities.
The report analyzes the history of state community reinvestment laws and recent developments. For example, although most of the states have had a community reinvestment law for some time (New York, for example, passed its law in 1978 and Connecticut, Massachusetts, Washington and West Virginia adopted a community reinvestment law in the 1980s), the Illinois laws was adopted in 2021 and the laws have been amended from time to time to “to cover additional types of financial institutions, collect additional data to better understand financial markets, and address other state-specific needs.”
Among the findings enumerated within the report are the following:
- Although originally applied primarily to state-chartered banks and credit unions, many of the laws have been expanded to cover mortgage companies. The New York and Massachusetts CRAs also apply to wholesale banking and limited purpose institutions, and other state CRAs include the requirement or authority to apply CRA obligations to other types of financial institutions.
- How a state community reinvestment law is enforced differs between the states. For example, Connecticut, Massachusetts, and New York conduct periodic, written performance evaluations, and Illinois has also proposed periodic, written performance evaluations. The District of Columbia, Rhode Island, and West Virginia, by contrast, conduct reviews or performance evaluations in response to a merger, branch or other expansionary application.
